You are currently viewing a non-negotiable for startup fundraising

a non-negotiable for startup fundraising

For all existing and upcoming startups, one cannot afford to not know a pitch deck. Additionally, one needs to master the art of making an impactful pitch deck, which beautifully articulates the whole purpose of its existence, and what one intends to achieve in a concise and impactful manner. 

A pitch deck plays a critical role in successfully articulating why investors should invest in a company. This document assumes even more importance in the case of startups as they have ideas and execution plans that are yet to be proven in the business context.

Having an impactful pitch deck is important for all businesses. Mostly, it is the first point of the formal introduction of the company, its promoters, business plans, and future growth path.

For a pitch deck to be impactful, it should have the following key features:

  • Easy to comprehend
  • Compelling investment case
  • Uncomplicated action plan

Let us now look at the essential components which must be included in a pitch deck to provide the investors with enough information, and create interest in investment proposal evaluation:

Constituents of a pitch deck

A startup pitch deck should typically cover the following key sections:

  1. Problem statement 
  2. Possible solution
  3. Target group
  4. Product or service
  5. Initial response, beta testing findings
  6. Team member’s skills and roles delivering top results 
  7. Competition intensity, and USP of the startup
  8. A summary of financials – to date and projections, including investment
  9. Previous fundraise amount along with the purpose

Problem statement

As a startup, what problems are you solving? This slide should explain the pain points, which the startup intends to address in the market. It needs to be a problem that people and investors can relate. The better the investor relates to the problem, the easier it is to capture the attention for the subsequent sections.

Possible solution

The solution needs to be concise and clear, and should solve a wider problem at scale. Please note that too much complexity around the solution might give an impression of a lack of focus. Also, one needs to articulate why it is the right time to provide this solution.

For instance, if the solution is app-based, it needs a huge smartphone penetration and high internet connectivity. Many startups fail for being either too early or too late to the market.

Target group

It is important to give a sense of the market the startup is targeting. Remember that investors are looking at the potential exit, and that is mostly possible if the market size is big enough to allow for growth at each stage of funding.

Institutional investors look for companies that can disrupt their industry and have the potential to fundamentally reshape the consumers’ experience/behaviour with a market. Having verified sources to provide market size data along with past and future growth gives comfort to investors.

Product or service

Here you must reveal your product/service offerings and their salient features. It can include a screenshot of your product in action, a description of the product, client reviews, efficiency parameters, etc.

The idea is to showcase why the product is the winning product and the capability to make a deep impact. If the product is yet to reach the minimum viable product, all research work done till now should be used to prove the product’s viability.

Initial response, beta testing findings

This is the section that should showcase the achievements from the time you have conceived your idea. It should cover quantitative aspects like growth in total customers, month-on-month revenue growth, any industry recognition, and more. This is an important aspect as it throws light on the execution capability against limited resources. 

Team members skills, and roles delivering top results

One of the most important slides in any pitch deck is the team. The team slide should highlight why this team is the ideal team to deliver a unique proposition. Remember that at the idea stage, one is looking at is 100 percent commitment, conviction, passion, and clarity of the team members to convert the vision into reality.

The team should ideally contain the leadership team, that is, the co-founders and advisors. A few achievements from every member could be incorporated as bullet points.

Leading business school MIT Sloan expressed it well when it stated that the past is the best predictor of the future. Thus, for many investors, the valuation at which they enter is predicated on the ability of the promoters to deliver success, which, in turn, is contingent on the past track record of the promoters. The academic background of the promoters also plays a pivotal role in extending comfort to investors.

Competition intensity, and USP of the startup

Investors want to understand the competitive intensity in the space the startup wants to venture or progress. This gives them a sense of maturity in the industry or segment. It also highlights the understanding of the startup about the space and showcases its differentiating value proposition against the competitor.

It is here that you may also include financial parameters for the competitors, including revenue, total funding round, and valuation, which could help in providing perspective on the market valuation. This will help during the negotiation stage.

A summary of financials – to date and projections, including investment

Investors want to understand how the money will be utilised and how this will reflect in the top line and bottom-line over the next three to five years. Typically, one should look at a three-year projection with granular details.

While these are the best estimates, which the founders are looking to achieve, it highlights the thought process around various line items towards the go-to-market strategy. For instance, costs related to employees, technology, marketing, and product development, etc. It provides a good idea to the investors as to how grounded the management of the company is.

Remember, this section forms an important part of your subsequent reviews. Hence, it makes sense to work thoroughly on this section, and if needed, take the help of advisors, professionals who can help in guiding you on the creation of the plan.

It is always a good idea to be more on the conservative side and over-deliver. Typically, you should provide a high-level summary in the deck, and keep the financials handy in excel format for sharing with investors, if they want to review it in detail.

Previous and proposed fundraise amount along with the purpose

Finally, what is the startup looking at raising, and what is the allocation of the amount being raised?

Since the deck is likely to go to various investors with minimum-maximum ticket size philosophy, it might help to provide a broad range for the fund required like between $2-3 million.

If the startup has received a commitment from some marquee investors, it would be good to highlight it as it provides comfort to other investors on the proposition. Website details and the contact information of the person handling the investor relationship should always be included.

Creating a pitch deck is both an art and science, and not all founders are expected to be good at it. Hence, if required, the startups should engage the services of professionals, advisors who can help in refining the proposition. Remember, the first impression is the most valuable in the investment world.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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